Can US Domestic Political Tactics Exposed During Alabama Election Campaign Impact International Economic Environment?

Mei Xinyu

DATE : Dec 18 2017/SOURCE : Yicai

Can US Domestic Political Tactics Exposed During Alabama Election Campaign Impact International Economic Environment?

(Yicai Global) Dec. 18 -- Will sexual harassment allegations that roil the US political, media and entertainment worlds affect the stability of the international economic environment? Democrat Doug Jones defeated Republican Roy Moore in US Senate special election in deep-red Alabama, indicating that it has become an issue that China and other economies must consider seriously when evaluating next year's international economic environment.

Why? Since the US is currently the only superpower in the world and has a bigger influence on the global economic environment and economic rules than any other countries, the voting results from the Alabama special election indicate that sexual harassment allegations may have tangible impacts on the US Congress and thereby affect the Trump administration's ability to implement its policies and key initiatives such as planned welfare reform and large-scale infrastructure program next year.

On the surface, Republicans not only won the presidency but also held onto its majorities in the House and Senate after last year's US presidential election, which will make it easier for President Donald Trump to pursue his own governing philosophy. However, the problem is that though Republicans have 20 more votes in the House, they do not have a big advantage in the Senate and hold 52 seats there, compared with 48 seats held by Democrats, before the Alabama special election.

The US party system does not have strict party disciplines as found in China. President Trump used to be a political outsider and has different political opinions and difficult personal relationships with the Republican establishment. Democrats and the anti-Trump Republican establishment continually refused to accept their defeat after the release of the results of last year's presidential election. All these have seriously constrained Trump's ability to handle his job. Several key legislative projects he backs failed to gain enough votes due to objections from Republicans. His tax reform bill didn't get passed until the end of his first year in office. Even if Trump seeks to make the best use of presidential executive orders as Franklin Roosevelt did, he has met repeated setbacks, given the US judicial system.

It will not be too difficult to iron out differences between the tax reform bill passed by the House and the Senate version. However, whether the welfare reform, large-scale infrastructure plan and other key follow-up programs will get approved next year will largely depend on Republicans' ability to maintain majority in the Congress and on whether Trump can successfully persuade the Congress. Therefore, the voting results from the Alabama special election is an ominous sign for Trump.

More importantly, the defeat of Roy Moore is mainly due to allegations of sexual harassment against him. Although no tangible evidence has been presented in any of these allegations and it is perfectly possible that such allegations are false, they are enough to shake the confidence of many traditional Republicans in the conservative state and prevent them from voting for Moore. With the precedent of victory, wouldn't Democrats use the same tactics again in the following congressional special elections and next year's mid-term elections? Or even raise sexual harassment allegations against Trump himself on a massive scale? Will that in turn weaken Republicans' majorities in Congress and create more uncertainties in the US economy and foreign policy? After all, some of these vacated seats are significant for tax and welfare reforms.

In the wave of "sexual harassment" sweeping in the political, media and entertainment circles of the US, Trump's opposition, who holds the absolute advantage of the media and entertainment industries, would be in a sense of awfulness of shooting oneself in the foot, because the "big names" in the media and entertainment industries who were caught in the wave so far are basically hardcore opposition of Trump including two Democrats, which means one seat more than the Republican Party lost in the Alabama by-election.

Trump, who fights the mainstream media via Twitter, is loved by the majority of the people. Allegations of "sexual harassment" against Trump himself have repeatedly been ridiculed by the public. Some media reports suggested that anti-Trump forces offer USD200,000 for women to appear personally for allegations of Trump sexual harassment, and even more, lawyers tried to profit from it. The question is how Trump translates this popularity into real Congressional votes? After all, Democrats used existing rules to hold the seats of two parliamentary members, while the Republicans lost one.

Moreover, if the traditional media "soft power" of the Democrats is substantially weakened while its number of seats in the Congress increased, will the opposition pattern of the Senate and the House further increase the uncertainty of the US policy-making?

Realistically speaking, Trump is the US president who has placed the greatest emphasis on rebuilding the domestic real economy in more than 20 years. The inherent logic of the concept of "Trump Economics" is to reduce the tax burden of the traditional middle class and enterprises, especially small- and medium-sized enterprises, through tax cuts to enhance their motivation and ability to work, start a business and expand it. It also involves making efforts toward recovery and motivating economic entities and entrepreneurship through social welfare system reform. It aims to reduce excess welfare spending that harms entire social efficiency and macro-stability, thereby enhancing the vitality of the entire national economy from a microcosmic point of view and alleviating the chronic illness of its trade and fiscal deficits for many years.

Because the trade deficit is essentially a manifestation of negative national savings, such negative outcome in the US stems from the fiscal deficit and the household sector deficit. By reducing intervention in external affairs and related investments and through tax relief and reform of welfare system to motivate businesses and reduce wasteful expenditures, it targets to ease the fiscal and trade deficits in the long term and consolidate the economic foundation of the US.

The framework of the above logic itself is not wrong. For China, we do not have to worry too much about some of the impact brought about by the US tax reform and tightening monetary policy. Instead, the uncertainty of its policies will bring us more troubles.

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